Diplomacy, not rent, remains at premium with CH-UH, Coventry school

Some of the ARTFUL studios on the top floor of the former Coventry school building, currently home to a community arts campus. Tom Jewell/Special to cleveland.com

CLEVELAND HEIGHTS, Ohio -- While representatives of the Coventry PEACE campus initiative met in private with City Council on Nov. 6, the Cleveland Heights-University Heights school board was holding a very public discussion of its own.

And this has prompted a written response from the nonprofit tenants who took exception to the tone of the school board, including the use of the term "squatters" after they were placed on month-to-month leases in May.

They have since been granted a reprieve by the city until next June. But only one of the tenants -- Bellefaire JCB, which pays no rent on 137 square feet -- had actually signed a lease as of last week.

The stalemate may have contributed to some of the frustration from school board members as CH-UH Director of Business Services George Petkac provided a spreadsheet that included unpaid rent totaling over $70,000, along with about $14,000 in utility bills.

Outgoing school board member Eric Silverman pointed out that most of the back rent is owed by Coventry Village Day Care "woefully in arrears" at $63,500.

As the only for-profit tenant, the day care was paying $6,050 a month on 6,600 square feet of space in the school, which the district closed in 2006 and started leasing out in 2010.

Coventry Village Day Care stopped paying its rent in May, after the district announced its intention to sell the property. A tenant since 2013, they were served an eviction notice in the fall and have since moved out.

As for the rest, "if we do not have a signed lease, they are still in the space and they are still writing checks, are they technically 'squatters?'" Silverman asked. "From a landlord's standpoint, what would we call these folks?"

Petkac said he would have to confer with attorneys, and while there may be "options to pursue," the district remains in a process with Cleveland Heights city officials, who were asked to market the property.

But the city has held off on issuing a formal Request for Proposals and Qualifications from interested developers while informal discussions have continued with the nonprofits about taking over the property and preserving the arts campus in a "public-private partnership."

In a Nov. 17 joint letter responding to comments made at the earlier school board meeting, the remaining tenants acknowledged they have not signed the month-to-month leases.

"Those leases were supposed to be accompanied by a memorandum of understanding from the city, confirming what we were told in July about staying in the building through July 2018," the letter states.

In the meantime, all of tenants associated with the PEACE campus proposal have continued to pay rent.

"So no, we are not 'squatters,' and we deeply resent the use of that word in a public forum," the tenants stated.

They added that they have always acted in good faith with the district, "even after learning suddenly in May that our leases were void and we could be forced to vacate with just 30 days notice."

Silverman also noted that the district had a "brief window of equilibrium" when the Artful studio moved into the remaining space in 2016, "everyone was paying their rent" and bills were being covered.

Petkac pointed to the most recent electric bill received that is upwards of $13,000 for July and August, largely due to the air conditioning running in the summer. District officials noted that utilities are generally paid through rent received.

Responding to a question from Silverman, Petkac added that until the district gets rid of the property, it could be on the hook for six-figure worst-case-scenario expenses like new HVAC units or a roof replacement.

School board member Jim Posch said that most tenants pay less than $500 in monthly rent, if anything, with the exception of Artful, at $1,429 a month, Ensemble Theatre, $1,272 monthly, and Urban Oak School -- not part of the proposal and $5,395 in arrears on $1,079 monthly rent.

"Instead of letting the property sit unused, in order to get tenants, we pretty much gave away the store," Posch said. "The rent is really, really below our hit, in terms of market rate."

The tenants countered in their Nov. 17 letter that this amounts to a "false equivalency -- since the school district does not (and should not) provide the same level of service that a commercial landlord would."

They point out that tenants were recruited based on the findings of a 2008 Coventry reuse study which found that housing arts and community-service nonprofits was popular with residents.

Most alarming to the tenants were references to having to "board up the building because we can't (afford to) keep it open," by Posch, and Petkac estimating it could be torn down for $350,000.

Earlier, Petkac had told the school board that if the current arrangement continues, the district will have to put some of the building's "deferred maintenance" onto the permanent improvement budget.

"We truly understand the board's frustration, but in turn they must try to imagine ours," the letter notes. "We're told by the city that it can't act on our proposal because of 'an understanding' -- there is no formal agreement -- with the school board to issue an RFQ to private developers.

"We're told by the school board that it can't even listen to our proposal because of its understanding with the city," the tenants' response added.

And with many of those tenants operating on a school-year time frame, it's reaching the point where they will have to find someplace else if it doesn't look like they are making any headway with their arts campus proposal.

"Our vision allows for the transfer of ownership more quickly than if an RFQ process moves forward, and has received strong community support," the tenants' letter states.

The nonprofits go on to ask the city and the school board to forego the RFQ process, "or at the very least, agree to extend our occupancy through June 2019 so we can submit our plan to the RFQ."

The tenants' joint letter also mentions the roughly 200 people who work at the school. In figures that were compiled in June at full capacity, that added up to over $47,000 collected annually in city payroll taxes from Coventry.

At the Nov. 6 meeting, outgoing CH-UH school board member Kal Zucker cited what he felt was a "good assessment" on the recent history of the Coventry property.

"It's also a good argument for us to stick to our core business, which is educating children, not renting," Zucker added. "And that's why we're making the efforts to move to the next phase in this endeavor."